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Amazon.com (NASDAQ: AMZN) might require a boatload of electricity to support its efforts as the king of online retailers and cloud computing. But thanks to its ambitious sustainability initiatives, Amazon is also quickly becoming one of the greenest companies in the world.
Amazon just announced its largest renewable-energy project to date, a massive 253-megawatt (MW) wind farm in Scurry County, Texas. Appropriately dubbed "Amazon Wind Farm Texas," the new farm will contain more than 100 massive wind turbines, is scheduled to begin delivering electricity to the grid in late 2017, and will be capable of generating 1 million megawatt hours (MWh) of electricity annually -- enough to power nearly 90,000 U.S. homes for an entire year.Amazon also said it will directly purchase around 90% of that electricity, noting that it contracted with Lincoln Clean Energy, which will build, own, and operate the farm.
The bigger picture
This isn't Amazon's first wind-powered rodeo; Amazon Wind Farm Texas will jointhree other wind farms in Ohio (Amazon Wind Farm U.S. Central), Indiana (Amazon Wind Farm Fowler Ridge), and North Carolina (Amazon Wind Farm U.S. East), as well as a solar farm in Virginia (Amazon Solar Farm U.S. East), all of which deliver electricity into the grids powering current and future Amazon Web Services (AWS) Cloud data centers. When Amazon Wind Farm Texas is complete, Amazon's wind and solar farms will be able to collectively generate more than 2.6 million MWh of energy annually, or enough to power over 240,000 U.S. homes for a year.
How does this all fit into the bigger picture? Or, more specifically, how much of a dent have these projects put in Amazon's total energy usage? Amazon hasn't offered an update to that figure this year. But as of April 2015, Amazon did reveal that roughly 25% of the power consumed by its global AWS infrastructure already came from renewable-energy sources. It also set a goal to increase that number to at least40% by the end of 2016. And over the long term, Amazon aims to ensure that 100% of the power consumed by AWS will come from renewable-energy sources.
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Powering a fast-growing giant
Then again, hitting that goal will be easier said than done, especially if Amazon Web Services is able to sustain its recent torrid pace of growth.
Last quarter, for example, AWS revenue skyrocketed 58% year over year, to $2.89 billion, and marked only a slight deceleration from the segment's 66% growth in trailing-12-month revenue, to $9.94 billion. And compared with Amazon's core retail business, the AWS segment is delightfully profitable, comprising just 10% of the company's overall sales last quarter, but almost 56% of total operating income.
To be fair, part of this incredible growth is the byproduct of Amazon more effectively monetizing the growing number of products and services afforded by AWS -- including but not limited to solutions for cloud infrastructure, file storage, data analytics, and security -- after a period of aggressively investing to build out its infrastructure.
But considering that a report last year from Morgan Stanley pegged Amazon Web Services' total addressable market at nearly $240 billion, and further estimated its share of revenue could more than double, to $20 billion, by 2018, you can be sure the size and energy requirements of Amazon Web Services' current infrastructure must inevitably increase over time.
So in the end, while Amazon Wind Farm Texas is easily Amazon's largest renewable-energy project to date, it seems safe to assume it won't be the last.
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Steve Symington has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.